Saudi Arabia, Russia reach oil output deal and urge others to keep promises

Saudi Aramco's Ras Tanura port. Saudi Arabia and Russia have agreed to extend the historic production cuts deal for at least one month. (Aramco)
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Updated 04 June 2020

Saudi Arabia, Russia reach oil output deal and urge others to keep promises

  • Big two OPEC+ producers will extend production cuts but want compliance from all members

DUBAI: Saudi Arabia and Russia have reached agreement on extending their oil output cuts and are taking a firm line with other producers to keep their pledges.

Ahead of a meeting of OPEC+, the two biggest producers in the alliance are telling others they must adhere to agreed production guidelines or risk a return to the market chaos of April, when some oil prices hit all-time lows.

An official at one Opec delegation told Arab News an agreement was in place between Saudi Arabia and Russia to extend the historic 9.7 million barrel cuts deal for at least one month, with a regularly monthly review— but it was contingent on all OPEC+ countries keeping their promises on current production levels.

“There is no dispute between Saudi Arabia and Russia on this,” the official said. “They are sticking by the rules, and they want to put pressure on to make all OPEC+ members do the same.”

Most other OPEC+ countries are believed to be willing to stick by the April cuts for an extended period. Nigeria and Iraq are considering the proposals for stronger compliance.

A “virtual” OPEC+ meeting could still go ahead at short notice, or could take place on June 9 as originally scheduled. Saudi Arabia has additional bargaining leverage in the 1 milion extra barrels it cut voluntarily, which could be reinstated at the end of this month 

Crude prices, which topped $40 a barrel for Brent this week partly on hopes that the cuts would be extended, reflected the late uncertainty, and slipped back to just over $39.

Oil experts do not expect the negotiations over compliance to derail a long term OPEC+ deal. “Compliance is always an issue, but all will want to avoid any instability,” said Robin Mills, chief executive of Qamar Energy consultancy. “It’s quite an achievement to get to $40 from where they were a few weeks ago.”

Tanker off UAE sought by US over Iran sanctions ‘hijacked’

Updated 16 July 2020

Tanker off UAE sought by US over Iran sanctions ‘hijacked’

  • The circumstances of the hijack are still unclear and the boat has been tracked to Iranian waters

DUBAI: An oil tanker sought by the US over allegedly circumventing sanctions on Iran was hijacked on July 5 off the coast of the UAE, a seafarers organization said Wednesday.

Satellite photos showed the vessel in Iranian waters on Tuesday and two of its sailors remained in the Iranian capital.

It wasn’t immediately clear what happened aboard the Dominica-flagged MT Gulf Sky, though its reported hijacking comes after months of tensions between Iran and the US

David Hammond, the CEO of the United Kingdom-based group Human Rights at Sea, said he took a witness statement from the captain of the MT Gulf Sky, confirming the ship had been hijacked.

Hammond said that 26 of the Indian sailors on board had made it back to India, while two remained in Tehran, without elaborating.

“We are delighted to hear that the crew are safe and well, which has been our fundamental concern from the outset,” Hammond told The Associated Press.

Hammond said that he had no other details about the vessel., a website tracking the oil trade at sea, said it saw the vessel in satellite photos on Tuesday in Iranian waters off Hormuz Island. 

Hormuz Island, near the port city of Bandar Abbas, is some 190 kilometers (120 miles) north of Khorfakkan, a city on the eastern coast of the United Arab Emirates where the vessel had been for months.

The Emirati government, the US Embassy in Abu Dhabi and the US Navy’s Bahrain-based 5th Fleet did not respond to requests for comment. Iranian state media did not immediately report on the vessel and Iran’s mission to the United Nations did not immediately respond to a request for comment.

In May, the US Justice Department filed criminal charges against two Iranians, accusing them of trying to launder some $12 million to purchase the tanker, at that time named the MT Nautica, through a series of front companies. 

The vessel then took on Iranian oil from Kharg Island to sell abroad, the US government said.

Court documents allege the scheme involved the Quds Force of Iran’s paramilitary Revolutionary Guard, which is its elite expeditionary unit, as well as Iran’s national oil and tanker companies. The two men charged, one of whom also has an Iraqi passport, remain at large.

“Because a US bank froze the funds related to the sale of the vessel, the seller never received payment,” the Justice Department said. “As a result, the seller instituted a civil action in the UAE to recover the vessel.”

That civil action was believed to be still pending, raising questions of how the tanker sailed away from the Emirates after being seized by authorities there.

Data from the MT Gulf Sky’s Automatic Identification System tracker shows it had been turned off around 4:30 a.m. on July 5, according to ship-tracking website Ships are supposed to keep their AIS trackers on, but Iranian vessels routinely turn theirs off to mask their movements.

Meanwhile, the 28 Indian sailors on board the vessel found themselves stuck on board without pay for months, according to the International Labor Organization. It filed a report saying the vessel and its sailors had been abandoned by its owners since March off Khorfakkan. The ILO did not respond to a request for comment.

As tensions between Iran and the US heated up last year, tankers plying the waters of the Mideast became targets, particularly near the crucial Strait of Hormuz, the Arabian Gulf’s narrow mouth through which 20 percent of all oil passes. Suspected limpet mine attacks the US blamed on Iran targeted several tankers. Iran denied being involved, though it did seize several tankers.